South Carolina First Steps to School Readiness Financial Audit - PDF document

Greene, Finney & Horton, CPAs South Carolina First Steps to School Readiness Financial Audit Presentation Year Ended June 30, 2015 2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ • HIGHLIGHTS  Unmodified opinion  General Fund – fund balance increased $6.8M  Implemented GASB #68/71 – reduced beginning net position by $5.3M on the government ‐ wide statements. 1

2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ • OPINION  First Steps’ responsibility:  Effective internal controls  Financial statements  GF&H responsibility:  Opinion – reasonable assurance that financial statements are materially correct  Issued unmodified opinion  BEST OPINION FIRST STEPS CAN RECEIVE  “Emphasis of Matter” paragraph included for the change in pension accounting. 2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ • General Fund GENERAL FUND  Includes the budgetary “general funds” (state $12,000,000 appropriations) and other $10,000,000 funding sources (federal $8,000,000 and private sources) $6,000,000  Total fund balance $4,000,000 $2,000,000 increased $6.8M to $11.8M $0  $11.1M of the fund balance 2013 2014 2015 is restricted for the 4K pre ‐ Fund Balance school program 2

2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ • General Fund GENERAL FUND • Unassigned fund balance 9 is $0.7 M, which is 2.0% 8 of FY 2015 actual 7 expenditures 6 5 • GFOA recommends a 4 minimum of 16.7% (two 3 2 months) 1 0 2013 2014 2015 Unassigned Fund Balance as a % of General Fund Expenditures 2015 FINANCIAL AUDIT FIRST STEPS ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • Major Reasons To Maintain An Adequate Fund Balance: • Significant emergencies and unanticipated expenditures • Flexibility for discretionary funding needs • Extremely important during uncertain economic times • Assists in managing cash flow fluctuations 3

2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Revenues*: GENERAL FUND • $41.1M for 2015: REVENUES* $33.9M in state appropriations • $6.3M in federal grants • $423K in Medicaid reimbursements • $45,000,000 $327K in local and private grants • $40,000,000 $129K in interest income • $35,000,000 • $5.7M (16%) increase from 2014 $30,000,000 $6.7M increase in state appropriations $25,000,000 • due to increased allocations for the $20,000,000 expansion of the 4K program. First $15,000,000 Steps operated an additional 50 ‐ 60 $10,000,000 centers in the current year as compared to the prior year. $5,000,000 $927K less in reimbursements from the • $0 SDE. The prior year reflected a one ‐ 2013 2014 2015 time reimbursement from the SDE for Reimbursement from SDE the TEACH grants written off in 2013. Other Revenues Interest Income Local and Private Grants Medicaid reimbursements * This includes all of First Steps’ General, Earmarked, Restricted, and Federal funds combined into one Federal Grants reported General Fund for financial statement purposes State Appropriations 2015 FINANCIAL AUDIT FIRST STEPS Greene, Finney & Horton, CPAs ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Expenditures*: GENERAL FUND • $34.3M for 2015: EXPENDITURES* $25.3M in allocations to county • partnerships and other entities $3.6M in contractual services • $3.3M in salaries $35,000,000 • $1.1M in employer fringe benefits • $30,000,000 $950K in other expenditures (rent, • materials, travel) $25,000,000 • $1.6M (5%) increase from 2014: $20,000,000 $5.1M increase in allocations to other • $15,000,000 entities due to the increased allocations expended for expansion of the 4K program $10,000,000 and the reclassification of payments to an agency from contractual services $5,000,000 $4.5M decrease in contractual services was • $0 primarily due to the reclassification of payments to an agency from contractual 2013 2014 2015 services. $0.5M increase in salaries and fringe • benefits. $0.5M increase in other expenditures. • Total Expenditures * This includes all of First Steps’ General, Earmarked, Restricted, and Federal funds combined into one reported General Fund for financial statement purposes. 4

2015 FINANCIAL AUDIT FIRST STEPS ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Entity ‐ Wide (GASB #34) Entity ‐ Wide (GASB #34) • Assets/Deferred Outflows • Net Position ‐ $6.6M. of Resources ‐ $13.5M  $0.6M Net Investment in  $0.6M is capital assets Capital Assets.  $11.1M Restricted for 4K  $11.7M is cash and cash equivalents pre ‐ school program  ($5.1M) Unrestricted.  $1.2M in other items • Liabilities/Deferred Inflows • Revenues ‐ $41.1M. of Resources ‐ $6.9M • Expenses ‐ $34.5M.  $0.4M is compensated absences  $5.9M in pension items.  Accounts payable and other accrued liabilities of $0.6M. 2015 FINANCIAL AUDIT FIRST STEPS ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Change In Accounting: • Implemented Statement No. 68 “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27” and GASB Statement No. 71 “Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68” in 2015: • First Steps participates in a cost sharing multiple ‐ employer plan – the South Carolina Retirement System (“SCRS”). • First Steps was required to record its pro ‐ rata portion of the net pension liability and deferred outflows/inflows of resources associated with the SCRS in its Statement of Net Position which has significantly decreased its beginning net position by approximately $5.3 million. • Net pension liability of $5.4M at June 30, 2015. 5